The book ‘Aftershock’ (2nd Edition, John Wiley & Sons, 2011) by David Wiedemer, et al

November 26, 2011

Has anyone read this book?  I couldn’t put it down-I read it cover to cover in two days.  It was really an eye-opener, explaining macro-economics in fairly simple terms.  The authors believe we’ve been in a very long ‘bubble’ economy (inflated beyond what economic fundamentals dictate), starting around 1982.  Their first book, America’s Bubble Economy, published in 2006, predicted a series of six bubbles that would soon burst, collapsing the artificially high level of growth we’ve had since the ’90s.  The first four bubbles began popping in 2007 starting with real estate, followed by the stock market crash in 2008.  The other two, personal debt and discretionary spending, are derivatives of these.  The remaining bubbles (government debt and the U.S. Dollar) haven’t popped yet, but when they do we’re going to have high inflation and high unemployment for years.

They show how the Fed has inflated the money supply by 3X what it was just 2 years ago (never been done before), and there is no sign of that stopping since its the only thing keeping us from sinking into a depression.  The problem is, the longer it goes on, the longer the eventual depression will last and the deeper it will be when the government debt bubble finally pops.   Their thesis: when the supply of money increases, as with anything its value goes down, meaning it buys less.  This is the sole reason for inflation, and is a separate phenomenon from, for example, ‘supply and demand.’  America’s current national debt is over $15 trillion (see debt clock to the right of this article), and the book says the Fed will continue to increase the money supply (by buying bonds) until the debt reaches about $20-$25 trillion, at which point no one, individuals nor foreign central banks, not even the Fed, will buy our obligations anymore.  And as the money supply increases, the value of U.S. Dollars will deflate big time.

However, the authors do believe the Euro and Dollar will continue to be “reserve” currencies, and they don’t predict the demise of either, despite, for instance, all the E.U.’s present debt problems.  Both currencies will certainly be worth a lot less.  They also don’t predict “the end of America.”

Bottom line–they highly advise getting low, fixed-rate loans on your home, making only the minimum payments (because of inflation it will be easier to pay off those dollars in the future) dump all other RE, sell your business, sell stock, sell any valuables/collectables, pay off your car (its easy to repossess if you lose your job and can’t make payments, while your home will be difficult to take away), and buy GOLD.  They say that for many years it will be the only thing that will hold its value, particularly because of its demand in the Middle East and Asia.  At a certain point, far into the mega-depression, actually near its end, gold will be a bubble also and then it will be time to sell.  But not now.  Buy now.

Wiedemer and partners foresee this ‘Aftershock’ starting in about 2013-2016. They don’t give exact dates, because its timing depends on a lot of factors, including the actions of the Fed, Congress, and what happens internationally.  But they do believe at this point it is unavoidable, due to the unpayable U.S. debt and huge increase in our money supply.

Aftershock was not written from a spiritual perspective, but certainly it is ‘contrarian.’  There’s not a lot of support in the economics community for Wiedemer & Co.’s viewpoint which considers the economy as evolving rather than cyclical, the standard understanding.

They foresee a lot of civil unrest, many businesses and homeowners squatting and not paying mortgage/rent, huge changes in entitlements, significant decreases in inflation-adjusted salaries, and joblessness in the 40-60% range.  Perhaps Jesus will return in the midst of all this forecasted chaos.


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